INCOME TAXES

6 Months Ended

Jun. 30, 2022

INCOME TAXES

INCOME TAXES

12. INCOME TAXES

The Company’s tax rate was 19.7% and 21.5% for the second quarter of 2022 and 2021, respectively, and 20.0% and 23.0% for the first six months of 2022 and 2021, respectively. The change in the Company’s tax rate for the second quarter and first six months of 2022 compared to the second quarter and first six months of 2021 was driven primarily by the impact of discrete tax items and special (gains) and charges. Further information related to special (gains) and charges is included in Note 2.

The Company recognized net tax expense related to discrete tax items of $3.7 million and $4.7 million in the second quarter and first six months of 2022, respectively. This included share-based compensation excess tax benefits of $0.7 million and $3.6 million in the second quarter and first six months of 2022, respectively. The amount of this tax benefit is subject to variation in stock price and award exercises. Additionally, the Company recognized discrete tax expense of $4.4 million and $8.3 million during the second quarter and first six months of 2022, respectively, primarily due to audit settlements, reserves for uncertain tax positions, prior year return adjustments, repricing of deferred tax balances, and other changes in estimates.

The Company recognized net tax expense related to discrete tax items of $7.7 million and $23.8 million in the second quarter and first six months of 2021, respectively. This included tax expense of $9.5 million related to prior year returns in the second quarter and first six months of 2021, and a deferred tax benefit of $0.9 million and deferred tax expense of $24.2 million associated with transferring certain intangible property between affiliates in the second quarter and first six months of 2021, respectively. Share-based compensation excess tax benefit was $4.2 million and $10.8 million in the second quarter and first six months of 2021. The remaining discrete tax expense of $3.3 million and $0.9 million during the quarter and first six months of 2021, respectively, was primarily due to other changes in estimates.